The Smart Bomb

The phone hasn't stopped ringing at Realms, Nokia's priority partner in Connaught Place, Delhi. Manit Jauhar, its proprietor says since the N8's launch on October 12, he has sold 70 handsets on day one, of which 50 were pre-booked. His staff is working overtime to demonstrate the device to eager customers.

Armed with the new N8, Nokia sets out to regain its appeal and market share.

That will clearly be music to Nokia's ears which is banking on this fully-loaded device to get its cool factor back. While the company is a global leader in mobile phones and smartphones by a wide margin, the lack of a cutting-edge product at the top-end as well as an onslaught of local competitors like Micromax at the volume end has left it gasping for breath. It hasn't helped that its global CEO, Olli-Pekka Kallasvuo, was removed recently and Anssi Vanjoki, the company's executive vice-president, multimedia, responsible for devices like the N8, quit.

Once known for its innovation-it developed a phone with a torch in 2003 -Nokia missed the bus in both, the dual-SIM market in India, which is a third of the total handset sales in the country, and the tablet market where the iPad has been a runaway success. In smartphones, mindspace has been taken over by the iPhones and BlackBerrys. Tero Kuittinen, executive director, MKM Partners says, "Nokia underestimated the touch-screen market over the past three years while competitors like HTC and Samsung raced ahead." Some say it was bogged down by the decisions taken by the parent, an allegation, D. Shivakumar, vice-president and managing director, Nokia India, refutes. "We combine the best of global and local thinking. Do you want to be hopelessly local and mindlessly global"?

As Michael Schroder, equity analyst at Finnish FIM Bank points out, "Next year, competition will increase, particularly in the mid-range segment with Android smartphones spreading in cheaper categories." Nokia will then need to be even more nimble.

Given how important the N8 is to the company at this juncture, what if the device doesn't perform? Opinions are divided. Anshul Gupta, principal research analyst at Gartner India, believes it is too small a market. "India is still driven by volume products where Nokia is top of mind and the leader," he says. Over 90 per cent of the 100 million mobile devices sold in India in 2009 were priced under Rs 10,000.

Schroder believes that while one single device would otherwise have not impacted Nokia-since it has products across the spectrum-the N8 is a different story, on the global level. "The bulk of the profits today are generated by smartphones, and with N8, Nokia now hopes to get back in the game again." Smartphones represent 20 per cent of the company's volume, over 50 per cent of sales and 60-70 per cent of profits. It is therefore vital for its future success. The much-delayed phone hit the global markets in September-end, even though the India management says it's on schedule here. Maybe it wanted to pre-empt the BlackBerry Torch and iPhone 4, which are in the offing.

Actor Priyanka Chopra with Shivakumar at the N8 launch.

Specification-wise, there is no faulting the N8. "It will set the thought leadership and benchmarks in the industry," says Shivakumar. "We have compared its top 10 features to those of our competitors and it outperforms all." But where the N8 makes up on hardware, it loses on the operating system (OS). Symbian does not generate the same levels of user-excitement or online-buzz as say Google's Android or Apple's iOS. Worse still, as users move to interactive applications on smartphones, Symbian doesn't have many developers making apps. "Nokia loyalists will definitely buy this", says Kunal Bajaj, India head at consulting firm, Analysis Mason, "but can it convert those who have moved on to Android or BlackBerry? I am not so sure."

The next few months are extremely critical as they will set the tone for 2011. "It's like do or die", says Bajaj. Nokia will have its ears to the ground.

--with inputs from Mitali Patel

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